The SA Reserve Bank (Sarb) on Monday washed its hands of municipalities who deposited millions in embattled VBS Mutual Bank as Nedbank stepped in to facilitate payouts to other depositors.
The central bank said its deal with Nedbank covered 97 percent of depositors and that the municipalities would have to wait to see if there were enough assets at VBS to cover everybody if they hoped to get their monies back.
“Municipalities had no business placing deposits with VBS. They knew they were breaking the law, but they did it anyway,” said Reserve Bank governor Lesetja Kganyago.
“Even after the Treasury issued a circular that called on municipalities to refrain from placing deposits with a mutual bank, more municipalities in fact put in more money with the bank.”
At least 15 municipalities had deposited a combined R1.5billion in deposits with the troubled bank.
Aeon Investment Management Chief Investment Officer, Asief Mohamed was quoted on the intervention by Nedbank in this article.